(Bloomberg News) Emerging-market stocks tumbled the most in eight months, currencies sank and borrowing costs rose as growing concerns of a nuclear disaster in Japan and conflict in the Middle East spurred investors to sell riskier assets.
The MSCI Emerging Markets Index declined 2.5% to 1,089.18 at 8:43 a.m. in New York, heading for the biggest drop on a closing basis since June 29. The extra yield on emerging- market debt over U.S. Treasuries jumped 14 basis points to 2.81%age points, the highest level since September, JPMorgan Chase & Co.'s EMBI+ Index showed. Bahrain's credit risk soared to a 20-month high as Saudi Arabian troops entered the country.
The MSCI index extended this year's loss to 5.4% after Japanese Prime Minister Naoto Kan said danger of further radiation leaks was rising at a crippled nuclear facility 135 miles (220 kilometers) north of Tokyo. South Korea's Kospi Index sank the most in four months, while shares in Taiwan posted the biggest drop since February 2010. South Africa's currency tumbled 2.6% after Societe Generale SA said Japanese investors may sell rand-denominated debt to raise cash following the March 11 tsunami that destroyed coastal towns.
"Markets are getting very nervous over what's happening in Japan, people are being risk averse and panicky," said Raymond Tang, who oversees $6.4 billion as chief investment officer at CIMB-Principal Asset Management Bhd. in Kuala Lumpur.
Global Selloff
Benchmark equity indexes retreated in all 15 major emerging markets tracked by Bloomberg that were open for trading today, with indexes in South Korea, Taiwan, South Africa and Turkey tumbling more than 2%. Saudi Arabia's Tadawul All Share Index retreated 3.5%, the most in two weeks.
Japan's Nikkei-225 Stock Average posted its biggest two-day plunge since the global stock-market crash of October 1987. Tokyo Electric Power Co.'s stricken nuclear power plant was today rocked by two further explosions and a fire as workers struggled to avert the risk of a meltdown.
The Bank of Japan injected 8 trillion yen ($98 billion) into money markets today, adding to yesterday's record cash injection, to secure the nation's financial stability following the March 11 quake -- updated to a magnitude of 9, from 8.9, by the U.S. Geological Survey.
"Investors are worried about the situation in Japan as the blast at the nuclear plant makes it a regional risk," said Zhou Xi, a strategist at Bohai Securities Co. "It's not about the earthquake but more about radiation leakage concerns, which will drag down the economy in Japan and even the whole of Asia."
Bahrain, Saudi